Laissez-faire

If the State has no right to interfere to protect the poor struggling against circumstances over which they have no control in the industrial world, it is difficult to see why the same State should be considered a beneficent agency when called in to protect the property of the rich against an infuriated mob of starving people. If the poor are to be left to struggle for existence unaided by the State, then why not the rich? ~ Keir Hardie

A society in which men recognize no check on their freedom soon becomes a society where freedom is the possession of only a savage few. ~ Learned Hand

Laissez-faire is an economic environment in which transactions between private parties are free from government restrictions, tariffs, and subsidies, with only enough regulations to protect property rights.

Every student with the misfortune to have studied economics at school or university will know that “the market” is the god before which we must all kneel. Markets bring consumers and producers together to ensure an equilibrium of supply and demand, the textbooks tell us. We may all be individuals each pursuing our own private interests, but this selfish endeavour miraculously results in an optimum outcome for all. You don’t even have to step inside a classroom to have received this lesson. It’s rammed home in normal times in every newspaper, in every news bulletin on the TV, in every politician’s speech. Just listen to them. Governments can’t expand spending on Newstart because “the markets” won’t allow it. Governments shouldn’t ramp up public housing because that will throw property markets into a spin. Competition should be opened between universities because a market in education will sift out the bad providers from the good. The champions of the market, if challenged to explain how it is that markets consistently result in supplies of goods lurching from shortages to gluts, point to the economic dysfunction of the old Soviet Union as proof that if “planning” replaces the market, a much bigger disaster ensues. It doesn’t take an Einstein to see what rubbish this is. The last thing any capitalist wants is “free competition”, because that might squeeze their profits. Just look at how the supermarkets have destroyed small shops or how any new industry that emerges is soon dominated by three or four companies globally.

The bourgeois never included the ownership of capital as one of the social restraints that should be abolished, for the simple reason that it was not to him a restraint at all. It never therefore entered his head to regard it as such, and he saw nothing inconsistent in calling for the abolition of privilege, monopoly, and so forth, while hanging on to his capital.

Christopher Caudwell, "Pacifism and Violence: A Study in Bourgeois Ethics," in Studies in a Dying Culture (1938)

You will not find political economists declaring that the only possible adjustment between laborers and capitalists is that of selfishness and rapacity—that each must get all he can and keep all that he gets, while the world cries laissez faire and the lawyers explain, "it is the beautiful working of the law of supply and demand;" in fine, you will not find the law of love shut out from the affairs of men after the feminine half of the world’s truth is completed.

Anna J. Cooper, A Voice from the South by a Black Woman of the South (1892), p. 58

Liberty ... is not the freedom to do as one likes. That is the denial of liberty and leads straight to its overthrow. A society in which men recognize no check on their freedom soon becomes a society where freedom is the possession of only a savage few — as we have learned to our sorrow.

Learned Hand, in "The Spirit of Liberty" - a speech at "I Am an American Day" ceremony, Central Park, New York City (21 May 1944)

The systems advocated by professed upholders of laissez-faire are in reality permeated with coercive restrictions of individual freedom. … What is the government doing when it "protects a property right"? Passively, it is abstaining from interference with the owner when he deals with the thing owned; actively, it is forcing the non-owner to desist from handling it, unless the owner consents. Yet Mr. Carver would have it that the government is merely preventing the non-owner from using force against the owner. This explanation is obviously at variance with the facts—for the non-owner is forbidden to handle the owner's property even where his handling of it involves no violence or force whatever. … In protecting property the government is doing something quite apart from merely keeping the peace. It is exerting coercion wherever that is necessary to protect each owner, not merely from violence, but also from peaceful infringement of his sole right to enjoy the thing owned.

There was a time in which the economics profession worked in the public interest, but in the neoliberal era, today, they work only for big corporations and billionaires... We could choose to enact economic policies that raise taxes on the rich, regulate powerful corporations or raise wages for workers. We have done it before. But neoliberal economists would warn that all of these policies would be a terrible mistake, because raising taxes always kills economic growth, and any form of government regulation is inefficient, and raising wages always kills jobs. Well, as a consequence of that thinking, over the last 30 years, in the USA alone, the top one percent has grown 21 trillion dollars richer while the bottom 50 percent have grown 900 billion dollars poorer, a pattern of widening inequality that has largely repeated itself across the world. And yet, as middle class families struggle to get by on wages that have not budged in about 40 years, neoliberal economists continue to warn that the only reasonable response to the painful dislocations of austerity and globalization is even more austerity and globalization.

If the State has no right to interfere to protect the poor struggling against circumstances over which they have no control in the industrial world, it is difficult to see why the same State should be considered a beneficent agency when called in to protect the property of the rich against an infuriated mob of starving people. If the poor are to be left to struggle for existence unaided by the State, then why not the rich?

Laissez-faire capitalism, or anarchocapitalism, is simply the economic form of the libertarian ethic. Laissez-faire capitalism encompasses the notion that men should exchange goods and services, without regulation, solely on the basis of value for value. It recognizes charity and communal enterprises as voluntary versions of this same ethic. Such a system would be straight barter, except for the widely felt need for a division of labor in which men, voluntarily, accept value tokens such as cash and credit. Economically, this system is anarchy, and proudly so.

Nevertheless the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of the production and distribution of a given output produced under conditions of free competition and a large measure of laissez-faire.

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it private enterprise on well tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is.

John Maynard Keynes, The General Theory of Employment, Interest and Money (1936), Book 3, Chapter 10, Section 6, p. 129

When laissez-faire creates instability, the move to a freer market can be something less than pure gain.

Political conservatives have focused on tax reduction as an economic growth strategy for three reasons. First it is self-serving; it saves rich people lots of money. Second, it comports with their ideological allegiance to laissez-faire economics. And third, tax incentives are less intrusive to business-as-usual than any other form of government planning.

Nineteenth-century civilization rested on four institutions. The first was the balance-of-power system which for a century prevented the occurrence of any long and devastating war between the Great Powers. The second was the international gold standard which symbolized a unique organization of world economy. The third was the self-regulating market which produced an unheard-of material welfare. The fourth was the liberal state. Classified in one way, two of these institutions were economic, two political. Classified in another way, two of them were national, two international. Between them they determined the characteristic outlines of the history of our civilization. […] the fount and matrix of the system was the self-regulating market. It was this innovation which gave rise to a specific civilization.

François Quesnay was the leading figure of the Physiocrats, generally considered to be the first school of economic thinking. The name “Physiocrat” derives from the Greek words phýsis, meaning “nature,” and kràtos, meaning “power.” The Physiocrats believed that an economy’s power derived from its agricultural sector. They wanted the government of Louis XV, who ruled France from 1715 to 1774, to deregulate and reduce taxes on French agriculture so that poor France could emulate wealthier Britain, which had a relatively laissez-faire policy. Indeed, it was Quesnay who coined the term “laissez-faire, laissez-passer.”

"François Quesnay." The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty. 21 July 2014.

Let it be, that should be the motto of all public powers, since the world was civilized ... That we cannot grow except by lowering our neighbors is a detestable notion! Only malice and malignity of heart is satisfied with such a principle and our (national) interest is opposed to it. Let it be, for heaven's sake! Let it be!

Most of those who say so easily that this is our way out do not, I am convinced, understand that fundamental changes of attitude, new disciplines, revised legal structures, unaccustomed limitations on activity, are all necessary if we are to plan. This amounts, in fact, to the abandonment, finally, of laissez faire. It amounts, practically, to the abolition of "business".

Rexford Guy Tugwell, "The Principle of Planning and the Institution of Laissez Faire", paper presented at the 44th annual meeting of the American Economic Association; reported in The American Economic Review (March 1932), vol. 22, no. 1, supplement, p. 76.